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From drone farming, autonomous farming machinery, crop and livestock monitoring to building and equipment management, the future of farming technology is here.
With a population of 1.4 billion, it comes as no surprise that the Chinese government invests heavily in agriculture technology to ensure a constant supply of food to increase crop productivity, monitor crops, and minimize the use of water, satisfying the large demand for food while minimizing negative environmental impact. Furthermore, agriculture technology plays an important role in tackling global climate change and bring China one step closer to achieving its goal of carbon neutrality.
The major market for agricultural technology (AgTech) is North America, standing at approximately 6.2 billion U.S. dollars. According to a report by Markets and Markets, the smart agriculture market is estimated to grow from USD 13.8 billion in 2020 to USD 22.0 billion by 2025, at a CAGR of 9.8%. Specifically, the precision farming segment is expected to hold the largest market share from 2020 to 2025 as a result of adoption of GPS-based guidance technology.
For foreign agricultural technology companies looking to enter the Chinese market, they may face these potential challenges:
Intense competition: The Chinese agriculture technology is a highly competitive sector. As of 30 June, 2021, there are already 228 agriculture technology startups in China, such as XAG (极飞科技), DJI Agriculture and Beijing Goke Agricultural Machinary Co Ltd.
Product Homogeneity: There exists >50 different agriculture technology products in the market. Most popular technology include soil and crop sensors, robot farmers and weather forecasting device. Other newest technology includes devices that apply machine learning to farming, as well as nitrogen modelling and drone technology. Therefore, foreign companies should establish a competitive advantage for their products to compete with domestic suppliers
High consumer switching costs: Switching of agricultural technology supplier requires full removal of the old equipment and installation of high costs new equipment. Hence switching costs is high thus consumers will be less willing to switch their supplier
Moving forward, agricultural connectivity is critical in delivering higher yields, lowering costs and promoting greater resilience and sustainability which the agriculture industry requires to thrive in the 21st century. According to a report by McKinsey, enhanced connectivity in agriculture could unlock more than $500 billion to global gross domestic product, a critical productivity improvement of 7-9% for the industry.
If your company has an agricultural technology which you think will be beneficial for the Chinese market, feel free to contact us at info@summeratlantic.com for a free evaluation of your technology’s fit and market potential in the Chinese market.
Thank you for reading and we look forward to working with you!